Digital Labour in the Platform Economy: the Case of Facebook

Total Page:16

File Type:pdf, Size:1020Kb

Digital Labour in the Platform Economy: the Case of Facebook Article Digital Labour in the Platform Economy: The Case of Facebook Andrea Fumagalli 1, Stefano Lucarelli 2,3, Elena Musolino 2,* and Giulia Rocchi 4 1 Department of Economics and Management, Università di Pavia, Pavia 27100, Italy; [email protected] 2 Department of Management, Economics and Quantitative Methods, Università di Bergamo, Bergamo 24127, Italy; [email protected] 3 Centre d'Économie de la Sorbonne at CNRS, Unit of Research 8174, Paris 75013, France 4 Axe Économie Politique, Université Paris 1 Panthéon-Sorbonne, Paris 75013, France; [email protected] * Correspondence: [email protected]; Tel: +39 338 68 61 583 Received: 04 March 2018; Accepted: 23 May 2018; Published: 27 May 2018 Abstract: The aim of the paper is to analyse the features of the digital labour connected with the so-called platform economy. Many platform-based business models rely on a new composition of capital capable of capturing personal information and transforming it into big data. Starting with the example of the Facebook business model, we explain the valorisation process at the core of platform capitalism, stressing the relevance of digital labour, to clarify the crucial distinction between labour and work. Our analysis differs from Fuchs and Sevignani’s thesis about digital work and digital labour and seems consistent with the idea that Facebook extracts a rent from the information produced by the free labour of its users. Keywords: organization of digital labour; platform economy; valorisation process 1. Introduction Notwithstanding the Internet bubble bursting during the late 1990s, the diffusion of information and communication technologies (ICT) continues to mark the 2000s. Particularly in recent years, we have witnessed a significant technological acceleration. Several sectors have been affected. These are industries that have more and more to do with the management of human life (for instance, the Human Genome Project, started in 1990 and concluded in 2003, opened enormous spaces in the possibility of the manipulation of individual life and its procreation [1]). As stressed by Robert Boyer “this sort of regime is an extension of the continued reassessment which has gone on concerning the potential of the information economy” [2]. If the ICT technological paradigm has hit employment levels in the manufacturing industry hard, the new bio-technological wave risks having even greater effects on the traditional and advanced tertiary sectors, which in the last decades have played a compensative role against the loss of jobs in traditional industries. The development of second generation algorithms [3] is allowing an automation process unprecedented in human history. Applied to machine tools, through computer technologies and nanotechnologies, they are able to transform them into increasingly flexible and ductile instruments and means of production. Second generation algorithms differ from the first generation due to their cumulative self-learning nature, hence configuring a new relationship between human and machine. Actually, after the first stage of implementation and creation, thanks to human behaviour, they are then able to operate in an almost total condition of automation (machine learning). The current technologies however, cannot operate without the acceleration (compared to the recent past) of the degree of collection and manipulation of extremely large amount of data in more and Sustainability 2018, 10, 1757; doi:10.3390/su10061757 www.mdpi.com/journal/sustainability Sustainability 2018, 10, 1757 2 of 16 more narrow spaces and with ever-increasing high speed. Already in 2011, research by McKinsey’s Global Institute examined the state of digital data and recognized the significant value that can potentially be unlocked: “There are five broad ways in which using big data can create value. First, big data can unlock significant value by making information transparent and usable at much higher frequency. Second, as organizations create and store more transactional data in digital form, they can collect more accurate and detailed performance information on everything from product inventories to sick days, and therefore expose variability and boost performance. Leading companies are using data collection and analysis to conduct controlled experiments to make better management decisions; others are using data for basic low-frequency forecasting to high-frequency now casting to adjust their business levers just in time. Third, big data allows ever-narrower segmentation of customers and therefore much more precisely tailored products or services. Fourth, sophisticated analytics can substantially improve decision-making. Finally, big data can be used to improve the development of the next generation of products and services.” [4] As argued by Martin Kenney and John Zysman, among others, “the algorithmic revolution and cloud computing are the foundations of the platform economy. But computing power is only the beginning of the story. That computing power is converted into economic tools using algorithms operating on the raw material of data.” [5] In the emerging digital platform economy, data as the final output, which is then realized on the global communication and advertising markets, originates a “network value” as the result of a continuous and dynamic process of interaction between human and linguistic labour and digitalized infrastructures (the platforms) [6]. A necessary (although not sufficient) condition for an algorithm to be exploited at maximum power is the existence of a standardization process of cataloguing the necessary data in relation to the predetermined purpose. This is made possible by the manipulation techniques for so-called “big data”, especially the big data analytical/mining techniques for structured and unstructured data (commonly called “data extraction”), as well explained in the literature on technology management by Amir Gandomi and Murtaza Haider [7]. Big data represent not only some of the most granular data ever existing generated second-by- second by every device and part of software connected to the web, but also represent an instrument able to change the deep meaning of human activities and particularly human labour. In Platform Capitalism, Nick Srnicek provides one of the first systemic Marxist interventions into the discourse around data-driven digitalization and the future of work [8]. According to Srnicek, the evolution of internet technologies has fundamentally altered the scenery of capital accumulation and property relations between firms, and legitimates the following question: does the emergence of platform capitalism constitute a new mode of exploitation? Srnicek offers an innovative framework through which to address this question in his conception of data as ‘raw material,’ but his analysis is limited to the effects of lean platforms on the labour market. From a Marxian perspective, two other problems should be considered: of what does the transformation process of personal information into big data consist? And, moreover, what is the origin of value in the platform economy? Starting with the example of the Facebook case, we explain the valorisation process at the core of platform capitalism, stressing the relevance of digital labour as a source of economic value for an ever increasing number of data-fuelled corporations. The main aim of Section 2 is the presentation of the value creation model used by Facebook. Indeed, the American online social media and social networking service company launched by Mark Zuckerberg represents an example of an advertising platform in which value is essentially based on a process of expropriation of the life skills of individuals. In the traditional way, platform capitalism has mainly to do with the satisfaction of some consumer services and the management of the sectors related to the logistics management of commodities. The most affected industries concern the tertiary sector, even if some aspects of the manufacturing sectors are involved. This Sustainability 2018, 10, 1757 3 of 16 perspective seems common to Nick Srnicek’s argument and the McKinsey reports on big data. This analysis of platform capitalism does not consider other relevant features of the economic model, especially the fact that the human activities on Internet platforms are increasingly integrated with the digital elements of communication and language, as we argue in Section 3. It is then necessary to elucidate the crucial distinction between labour and work in order to propose a specific definition of “digital labour”, as we do in Section 4 after discussing the concept within the Marxian debate. We particularly refer to the recent contributions by Christian Fuchs and Sebastian Sevignani (2013) [9] and Trebor Scholz (2017) [10]. Section 5 concludes. 2. The Case of Facebook As shown in Figure 1, Facebook is the undisputed global leader in the social network domain. Figure 1. World map of social networks. Source: http://vincos.it/world-map-of-social-networks. As of the first quarter of 2017, the worldwide number of Facebook monthly active users amounted to 1.94 billion, with an increase of 17% year-over-year [11]. A monthly active user (MAU) is defined as a registered Facebook user who logged in and visited Facebook through the website or a mobile device, or used the Messenger application at least one time in the last 30 days; this metric, as well as those about the daily active users (DAUs) and the average revenue per user (ARPU), do not include Instagram,
Recommended publications
  • Amazon.Com E-Tail Customer Fulfillment Networks Pioneer
    Customer Fulfillment in the Digital Economy Amazon.com E-tail Customer Fulfillment Networks Pioneer “The logistics of distribution Scorecard are the iceberg below the 1 waterline of online bookselling.” B-web type • Aggregation (e-tail) /Agora —Jeff Bezos, (auctions, Zshops) hybrid model founder and CEO, Amazon.com KEY PARTICIPANTS “Ten years from now, no one Customers • Consumers and business buyers will remember whether Context providers • Amazon.com and online Amazon.com spent an extra merchants (Amazon.com $100,000 upgrading shipping associates, Zshops, auctions) from the West Coast to the East Content providers • Amazon.com and small online merchants (Amazon.com Coast. All that will matter is associates, Zshops, auctions) whether electronic commerce • Suppliers and b-web partners gave people a good or bad (publishers; producers [OEM]; distributors e.g. Ingram Micro, experience.”2 Baker & Taylor Books, and others) —David Risher, senior vice president for Commerce services • Amazon.com and merchants merchandising, Amazon.com participating in auctions and Zshops “This [the Amazon.com • Third party shippers (UPS & USPS) distribution warehouses and Infrastructure providers • Amazon.com Drop shippers such as Ingram CFN] is the fastest expansion of • • Technology providers such as distribution capacity in Oracle, Net Perceptions, and i2 peacetime history.”3 Technologies Third party shippers (UPS, USPS) —Jeff Bezos, • founder and CEO, Amazon.com Offering • The largest online e-tailer of books, music, videos, toys, and gifts • Recently expanded service offering to include auctions (March 1999) and Zshops (September 1999)—an aggregation of merchants on its Web site • Aspires to become a one-stop shop for merchandise on the Web CFN value proposition • “Earth’s largest selection” of merchandise at competitive prices, 360 Adelaide Street W, 4th Floor a validated product assortment, Toronto, Ontario.
    [Show full text]
  • How Should We Measure the Digital Economy? 2
    Hutchins Center Working Paper #5 7 January 2020 How Should We Measure the Digital Economy? Erik Brynjolfsson MIT Initiative on the Digital Economy MIT Sloan School of Management Avinash Collis MIT Initiative on the Digital Economy MIT Sloan School of Management A BSTRACT Over the past 40 years, we’ve seen an explosion of digital goods and services: Google, Facebook, LinkedIn, Skype, Wikipedia, online courses, maps, messaging, music, and all the other apps on your smartphone. Because many internet services are free, they largely go uncounted in official measures of economic activity such as GDP and Productivity (which is simply GDP/hours worked). If we want to understand how the internet is contributing to our economy, we need better ways to measure free services like Facebook, Google and Wikipedia. We developed techniques with Felix Eggers of University of Groningen that allow us to estimate the internet’s contribution to the economy. Our research suggests that there has been a substantial increase in well-being that is missed by traditional metrics like GDP, or productivity. The authors did not receive financial support from any firm or person for this article or from any firm or person with a financial or political interest in this article. Neither is currently an officer, director, or board member of any organization with an interest in this article. ________________________________________________________________________ THIS PAPER IS ONLINE AT https://www.brookings.edu/research/how- should-we-measure-the-digital-economy 1. Introduction How much would we have to pay you to give up Google search for one month? $10? $100? $1,000? How about Wikipedia? Perhaps you don’t use Google or Wikipedia at all, and so your reply is $0.
    [Show full text]
  • The New Digital Economy and Development
    UNCTAD UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT THE «NEW» DIGITAL ECONOMY AND DEVELOPMENT UNCTAD Technical Notes on ICT for Development N˚8 UNITED NATIONS UNCTAD, DIVISION ON TECHNOLOGY AND LOGISTICS SCIENCE , TECHNOLOGY AND ICT BRANCH ICT POLICY SECTION TECHNICAL NOTE NO8 UNEDITED TN/UNCTAD/ICT4D/08 OCTOBER 2017 The ‘New’ Digital Economy and Development 1 Abstract : This technical note frames the ‘New’ Digital Economy (NDE) as including, most prominently: 1) advanced manufacturing, robotics and factory automation, 2) new sources of data from mobile and ubiquitous Internet connectivity, 3) cloud computing, 4) big data analytics, and 5) artificial intelligence. The main driver of the NDE is the continued exponential improvement in the cost-performance of information and communications technology (ICT), mainly microelectronics, following Moore’s Law. This is not new. The digitization of design, advanced manufacturing, robotics, communications, and distributed computer networking (e.g. the Internet) have been altering innovation processes, the content of tasks, and the possibilities for the relocation of work for decades. However, three features of the NDE are relatively novel. First, new sources of data, from smart phones to factory sensors, are sending vast quantities of data into the “cloud,” where they can be analysed to generate new insights, products, and services. Second, new business models based on technology and product platforms — platform innovation, platform ownership, and platform complimenting — are significantly altering the organization of industries and the terms of competition in a range of leading-edge industries and product categories. Third, the performance of ICT hardware and software has advanced to the point where artificial intelligence and machine learning applications are proliferating.
    [Show full text]
  • A Common Framework for Measuring the Digital Economy
    www.oecd.org/going-digital-toolkit www.oecd.org/SDD A ROADMAP TOWARD A COMMON FRAMEWORK @OECDinnovation @OECD_STAT FOR MEASURING THE [email protected] DIGITAL ECONOMY [email protected] Report for the G20 Digital Economy Task Force SAUDI ARABIA, 2020 A roadmap toward a common framework for measuring the Digital Economy This document was prepared by the Organisation for Economic Co-operation and Development (OECD) Directorate for Science, Technology and Innovation (STI) and Statistics and Data Directorate (SDD), as an input for the discussions in the G20 Digital Economy Task Force in 2020, under the auspices of the G20 Saudi Arabia Presidency in 2020. It benefits from input from the European Commission, ITU, ILO, IMF, UNCTAD, and UNSD as well as from DETF participants. The opinions expressed and arguments employed herein do not necessarily represent the official views of the member countries of the OECD or the G20. Acknowledgements: This report was drafted by Louise Hatem, Daniel Ker, and John Mitchell of the OECD, under the direction of Dirk Pilat, Deputy Director for Science, Technology, and Innovation. Contributions were gratefully received from collaborating International Organisations: Antonio Amores, Ales Capek, Magdalena Kaminska, Balazs Zorenyi, and Silvia Viceconte, European Commission; Martin Schaaper and Daniel Vertesy, ITU; Olga Strietska-Ilina, ILO; Marshall Reinsdorf, IMF; Torbjorn Fredriksson, Pilar Fajarnes, and Scarlett Fondeur Gil, UNCTAD; and Ilaria Di Matteo, UNSD. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
    [Show full text]
  • The Taking Economy: Uber, Information, and Power
    ESSAY THE TAKING ECONOMY: UBER, INFORMATION, AND POWER Ryan Calo∗ & Alex Rosenblat∗∗ Sharing economy firms such as Uber and Airbnb facilitate trusted transactions between strangers on digital platforms. This creates eco- nomic and other value but raises concerns around racial bias, safety, and fairness to competitors and workers that legal scholarship has begun to address. Missing from the literature, however, is a fundamen- tal critique of the sharing economy grounded in asymmetries of infor- mation and power. This Essay, coauthored by a law professor and a technology ethnographer who studies work, labor, and technology, furnishes such a critique and proposes a meaningful response through updates to consumer protection law. ∗. Lane Powell and D. Wayne Gittinger Assistant Professor of Law, University of Washington School of Law. ∗∗. Researcher and Technical Writer, Data & Society Research Institute. The authors would like to thank Christo Wilson, Yan Shvartzshnaider, and Michelle Miller at Coworker.org; Nayantara Mehta and Rebecca Smith at the National Employment Law Project; participants in the Berkeley Law Privacy Law Scholars Conference; participants in the Loyola Law School faculty workshop; participants in the University of Pennsylvania IP colloquium; and danah boyd, Stacy Abder, Shana Kimball, Janet Haven, Julia Ticona, Alexandra Mateescu, Caroline Jack, and Shannon McCormack for thoughtful insights, comments, and feedback. The Uber Policy Team also provided helpful comments, which we try to address throughout the paper. Madeline Lamo, the librarians at Gallagher Law Library, and Patrick Davidson provided excellent research and editing. Rosenblat’s ongoing qualitative research on ride-hail drivers from 2014–2017 is vari- ously funded by Microsoft Research (FUSE grant–Peer Economy, 2014); the MacArthur Foundation (Intelligent & Autonomy Grant, 2014–2016); Open Society Foundations (Future of Work, 2014); and the Robert Wood Johnson Foundation (Mapping Inequalities in the On-Demand Economy, 2017–2018).
    [Show full text]
  • New Strategies for the Platform Economy
    SPECIAL COLLECTION STRATEGY New Strategies for the Platform Economy To reap the rewards and avoid the risks, companies exploring a platform business model must look carefully at their partnerships and growth strategy. Brought to you by: SPRING 2021 NEW STRATEGIES FOR THE PLATFORM ECONOMY SPECIAL REPORT 1 9 17 Competing on How Healthy Is Your Platform Scaling, Platforms Business Ecosystem? Fast and Slow THE DOMINANT DIGITAL PLATFORMS are now among the world’s most phases. At each stage, there are specific early valuable — and most powerful — companies, leaving a huge swath of organizations forced indicators to look for that point to potential to play by their rules. In this new competitive environment, businesses need new ways to failure. Tracking the appropriate metrics gain advantage despite platforms’ constraints and market clout. And businesses seeking to for each stage and being alert to red flags create successful platform ecosystems find that while the rewards can be great, the helps businesses pivot to a new approach or likelihood of failure is high. This special report examines the challenges faced by both limit their losses. platform owners and participants. Platforms aiming for market dominance have typically prioritized rapid growth. The asymmetries in power and infor- attention from U.S. and European regulators, However, Max Büge and Pinar Ozcan have mation between platform owners and the whose scrutiny of dominant platforms’ found that scaling quickly is not the right businesses reliant on them have implications practices may lead to shifts in the prevailing strategy in all circumstances: Pursuing fast for the traditional levers of competitive balance of power.
    [Show full text]
  • Opening Remarks Here
    More than a year ago, this Subcommittee launched an investigation into digital markets. Our two objectives have been to document competition problems in the digital economy, and to evaluate whether the current antitrust framework is able to properly address them. In September 2019, the Chairman and Ranking Members of the Full Committee and the Subcommittee issued sweeping, bipartisan requests for information to the four firms that will testify at today’s hearing. Since then, we have received millions of pages of evidence from these firms, as well as documents and submissions from more than 100 market participants. We also conducted hundreds of hours of interviews. As part of this investigation, we have held five hearings to examine the effects of online market power on innovation and entrepreneurship; data privacy; a free and diverse press; and independent businesses in the online marketplace. We have held 17 briefings and roundtables with over 35 experts and stakeholders in support of our work. This investigation has been bipartisan from the start. It has been an honor to work alongside my colleague, Congressman Jim Sensenbrenner, the Subcommittee’s Ranking Member, as well as the former Ranking Member of the Full Committee, Congressman Doug Collins. We worked closely with all the Members of the Subcommittee, who have taken this work seriously and studied these issues closely. As my colleague Congressman Ken Buck recently commented, “This is the most bipartisan effort that I have been involved with in five and a half years of Congress.” The purpose of today’s hearing is to examine the dominance of Amazon, Apple, Facebook, and Google.
    [Show full text]
  • Making Dollars & Sense of the Platform Economy
    CognizantiAn annual journal produced by Cognizant VOLUME 9 • ISSUE 1 2016 Part III Digital Business 2020: Getting there from here! Commentary Making Dollars & Sense of the Platform Economy Commentary Making Dollars & Sense of the Platform Economy By Anand Chandramouli As market dynamics change, the digital economy. Consider the argument made by economist Ronald Coase in his organizations must figure out seminal article “The Nature of the Firm,”2 how and where to plug and in which he examines the primary driver for forming partnerships and companies instead play with emerging platforms of trading bilaterally. In an inefficient market, that create economies of he argues, it makes more sense to conduct business through a centralized company scale and new forms of value. because it helps minimize transaction costs (hiring, negotiating, contract enforcement) for value creation. Platforms are proliferating across industries at the speed of digital. Underpinned by the Now, what if the market rigidities3 and Internet, and powered by social, mobile, inefficiencies that made those economics analytics and cloud technologies (aka, the compelling were to change? What happens SMAC Stack), platforms are upending when the transaction costs of exchanging long-held conventional wisdom about how value, outside the company, decline to markets work, the role of intermediation and below the company’s in-house costs? In transparency, and the variety of interactions such a scenario, the economic rationale for and transactions they enable. the company ceases to exist. That’s exactly what’s happening amid the unfolding Code Platforms vary widely in their focus; while HaloTM economy and the emergence of open some support broad, horizontal markets, application programming interfaces (APIs) others target specific business functions or powering more transparent and digital industry sectors.
    [Show full text]
  • Notes from the AI Frontier: Modeling the Impact of AI on the World Economy Globally by 2030, Or About 16 Percent Higher Cumulative GDP Compared with Today
    NOTES FROM THE AI FRONTIER MODELING THE IMPACT OF AI ON THE WORLD ECONOMY DISCUSSION PAPER SEPTEMBER 2018 Jacques Bughin | Brussels Jeongmin Seong | Shanghai James Manyika | San Francisco Michael Chui | San Francisco Raoul Joshi | Stockholm Since its founding in 1990, the McKinsey Global Institute (MGI) has sought to develop a deeper understanding of the evolving global economy. As the business and economics research arm of McKinsey & Company, MGI aims to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions. MGI research combines the disciplines of economics and management, employing the analytical tools of economics with the insights of business leaders. Our “micro-to-macro” methodology examines microeconomic industry trends to better understand the broad macroeconomic forces affecting business strategy and public policy. MGI’s in-depth reports have covered more than 20 countries and 30 industries. Current research focuses on six themes: productivity and growth, natural resources, labor markets, the evolution of global financial markets, the economic impact of technology and innovation, and urbanization. Recent reports have assessed the digital economy, the impact of AI and automation on employment, income inequality, the productivity puzzle, the economic benefits of tackling gender inequality, a new era of global competition, Chinese innovation, and digital and financial globalization. MGI is led by three McKinsey & Company senior partners: Jacques Bughin, Jonathan Woetzel, and James Manyika, who also serves as the chairman of MGI. Michael Chui, Susan Lund, Anu Madgavkar, Jan Mischke, Sree Ramaswamy, and Jaana Remes are MGI partners, and Mekala Krishnan and Jeongmin Seong are MGI senior fellows.
    [Show full text]
  • UK Vision for the EU's Digital Economy Europe's Electronic
    UK vision for the EU’s digital economy Europe’s electronic communications landscape has transformed into a digital world. A world dominated by internet platforms, constantly altered by new and at times disruptive technologies, and full of opportunities for start-ups that pay no heed to geographical boundaries when creating new products and services. Europe starts from a great position – Estonia’s public service reforms, Germany’s start-up scene or the UK’s ‘fintech’ ecosystem are examples of real progress. Many European countries, such as Ireland, Belgium, and Sweden have high broadband speeds - with the Netherlands’ faster than the US average. But the continent’s patchwork of national markets and outdated legislation looks increasingly anachronistic in this new world. Compared especially to the United States, it is still too hard to start, fund and scale-up a digital business so that it can compete globally.1 Problems fall into a number of categories: Consumers are disadvantaged: customers of streaming services providing films, music or TV programmes should be able to access the services they have paid for when travelling in the EU – they currently cannot. And, similarly, customers shopping online just over the border should be able to take advantage of the buy-one-get-one free or 50% off offers that they would have accessed if they had driven to the shop in person. Start-ups don't have easy access to a large market to work and trade in and so are disadvantaged compared to non-European firms. For example, new start- ups offering digital products and services across Europe currently have to meet the administrative requirements necessary to pay VAT in every country they sell to – rules designed for much larger businesses – and if they want to set up a web domain name in some Member States they have to have a physical address there.
    [Show full text]
  • E-Conomy Africa 2020 Report
    e-Conomy Africa 2020 Africa’s $180 billion Internet economy future Table of Contents Foreword ............................................................................................................................................ 2 Executive Summary ........................................................................................................................ 3 Acknowledgements ........................................................................................................................ 4 Section 1: The State of the Continent, Macro Trends, and Drivers of Change ............. 5 Section 2: Africa’s Growing Internet Economy, Trends, and Projections ...................... 11 Development Opportunities within the Informal Sector .............................. 26 Section 3: Overview of Africa’s Growing Developer and Digital Talent ....................... 28 Section 4: A Review of Africa’s Venture Capital and Funding Landscape .................. 45 Section 5: The Role of Africa’s Hubs and Accelerators ................................................... 52 The Impact of Global Tech Initiatives on Africa’s Internet Economy ................................................................................ 58 Section 6: Infrastructure is Key: Increasing Connectivity on the Continent ............. 60 Section 7: Regulatory Hurdles and Opportunities for Africa’s Internet Economy ..... 69 Appendix: Abbreviations and Acronyms .................................................................................. 81 References .....................................................................................................................................
    [Show full text]
  • UBER: a Test Case Analysis of Nexus in Digital Economy Thesis
    UBER: A Test Case Analysis of Nexus in Digital Economy Thesis University of Amsterdam – IBFD Submitted by Lakshmi Narayanan Date of Submission: 27 July 2018 Supervised by Dr.Joanna C. Wheeler Dr. Dhruv Sanghavi (Co-supervisor) 1 Abstract Digitalization of economy creates possibilities for borderless business operations without any physical presence in a jurisdiction. This has created policy challenges in lot of areas including that of international taxation. Especially the principle that profits of MNE should be taxed at the place of value creation is under attack. The direct tax policy challenges associated with digital economy are outlined by OECD under BEPS Action Plan 1. In the above context, the nexus required for source taxation of cross-border profits of MNE has been found to be weakened. This vulnerability is owing to the nature of source rule codified in tax treaty rules. The tax treaty rules such as PE under article 5 and consequent allocation of taxing rights based on proportionate corporate profits to be taxed at source jurisdiction under article 7 of Model conventions are found nonoperational. This thesis explores the scope of current tax treaty rules to accommodate digital business model and in case of inadequacy, the alternate options by way of modification of existing tax treaty rules to address the source taxation of such business are examined. To conduct a scientific inquiry, it is found necessary to work within a specific business model. UBER is taken as a test party to undertake such scientific inquiry. To test the treaty rules for source taxation, the paper discussed the nature of UBER business model by drawing a brief intra firm legal and economic-operational relationship of UBER MNE to create context for discussion.
    [Show full text]